Buy the Book: Little Bets describes the process innovators often go through. Innovation is the byproduct of dozens to hundreds to thousands of small successes and failures that allow innovators to learn and adapt and achieve a successful outcome.
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Lessons from Charlie Munger at the 2023 DJCO Meeting
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Charlie Munger held court at the Daily Journal annual meeting this week. The 99-year-old answered questions for about two and a half hours.
The questions mostly revolved around investing and life. As is typical of Munger, he offered several quotable responses and lessons along the way.
I highlighted a few of the broader lessons below. You can find a link at the end to watch the annual meeting in full. Continue Reading…
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Wise Words on Investing Mistakes
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Mistakes will be made. It’s a normal part of investing. The question is what will you do when you make one and how bad will the outcome be?
Big mistakes are the issue.
An extreme example is you bet all your savings on a single stock — a tip you got from a friend. It has some early success only to tumble 30%. And this is where biases creep in to deter the best decision possible.
You’re maybe too confident things will turn around. Everyone says, “it’s due for a bounce.” All you want is to recover your losses.
So you hold on. Except, it falls further — 50%, then 70%. Finally, you give in and sell at a 90% loss.
With 10% of what you started with, you’re stuck with the incredible task of rebuilding it back up. Of course, blindly following a stock tip or betting it all on a “sure thing” are only two of a countless number of ways to part with your money. Continue Reading…
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Weekend Reads – 2/3/23
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Quote for the Week
Most people think of common stocks as speculative media. They are not, in my opinion. Good common stocks are investment media which are subject to speculative influences. The speculative influences are not the common stocks; they are in the minds of the people who buy and sell them. The problem of investment in common stocks is either to insulate yourselves from the speculative influences, or else to adjust your investment policy so that you can take advantage of the speculative fluctuations that are imposed upon the basic investment quality of common stocks. — Benjamin Graham (source)
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The Art of Execution by Lee Freeman-Shor
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Freeman-Shor studied over 1,800 investments made by fund managers under his leadership to see if there were similar habits that led to their success or failure. He shares the common habits found around losing and winning investments that improve and hurt returns.
The Notes
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Surviving Market Inflection Points
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Practically everything in markets is cyclical. Bull markets become bear markets which turn into bull markets…and the cycle repeats. What’s old is new again, so to speak.
An inflection point marks the shift from a bull to a bear market (or vice versa). It’s the turning point in the market cycle. They also tend to be turning points for investors as well. Often to their detriment.
Just ask John Neff. He experienced numerous inflection points throughout his career. Each moment his strategy seemed to stop working. One thing stood out that was key to his success: Continue Reading…
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